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Apple in talks to bring pay technology to Europe

Banks and credit card organisations are in talks to bring Apple's mobile payment technology to Europe but there is still uncertainty over the timing.

While Apple fans in the UK, France and Germany will be able to buy the new generation iPhone in the next 10 days and thus at the same time as customers in the US, there is one important feature that they will still be deprived of: Apple Pay, which allows customers to pay with their smartphones.

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Apple is introducing the technology in the US first, coupled with a promise to overhaul what it calls an "antiquated" payments system.

Tim Cook announces Apple Pay during an Apple special event at the Flint Center for the Performing Arts on September 9, 2014 in Cupertino, California.
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Tim Cook announces Apple Pay during an Apple special event at the Flint Center for the Performing Arts on September 9, 2014 in Cupertino, California.

"We are working closely with Apple and with our member banks to bring this new service to market in Europe," said Steve Perry, chief digital officer at Visa Europe.

Analysts said it is ironic that Apple's mobile wallet will not yet be available on the continent that is more advanced when it comes to using contactless payment systems.

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While mobile phone payment has not yet made a breakthrough on either side of the Atlantic, in Europe there is a widespread circulation of contactless cards that use the same near-field communication technology as Apple Pay.

Roughly 100m contactless cards exist in Europe, a fifth of all payment cards.

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Importantly, there are already numerous retailers and other points of sales that offer contactless payment and that could be used for Apple Pay as well.

There are 1.5m such terminals across Europe, a rapid growth since Visa Europe started to roll them out in 2007. Every new installation today is equipped with the technology.

The UK is a hotspot, with 350,000 terminals in places ranging from McDonalds restaurants to London buses where customers can make contactless payments. In June, the use of contactless payments more than tripled within a year to reach a total transaction value of £136.4m.

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While penetration is high, there is still a wariness among consumers to use the technology, which is mostly capped at €30 per day on the continent or £20 in the UK for security reasons.

A survey by ING last year showed that 45 per cent of respondents doubted that their money is secure when they use contactless payments, which operate without an additional PIN number within the payment limit. Apple Pay, however, will require a finger print recognition on the iPhone.

Analysts said that for Europe's banks, Apple's foray into the contactless payment market will be both a threat and opportunity. The disadvantages are that banks will have to pay a cut of the transaction fees to Apple and that their brand will no longer be visible to the customer.

But there is an upside as well: "They see an opportunity to have more transactions going away from costly cash and cheque payments," Mr Perry said.